All Forum Posts by: Kenny Lincoln

I know this is an older thread but has anyone had experience with Rent to Retirement? They have properties listed in a variety of states. Thanks for any feedback on them or other turn key companies that would be recommended. 

 Thanks Nate, I’m certain this depends on a variety of factors. I’m trying to get a general understanding of how much Is needed. If retirement accounts can be included in the calculation, I won’t have any issues with reserves. Unfortunately, without retirement accounts, I won’t have enough reserves when considering the purchase of numerous properties to hit a short term goal of min $1500/month cash flow. Keep in mind everything needs to happen at almost the same time to complete the 1031. For example, I could put the entire $215k towards larger down payment on fewer properties, and thus keep reserve needs lower, but I’m uncertain if I will get the $1500/month cash flow desired. Does that make sense? 

Looking for feedback about the following scenario, thanks BP. 

Plan to sell an investment property and receive around $215k. I would like to use a 1031 exchange to leverage all of this money. I’m trying to get an understanding of the potential reserves needed to be approved for lending.

Assume the following

1 primary residence with wife as co-borrower, MITI of $2200/month

Buying 7 investment properties with me as only borrower, average MITI of $640/month

800+ credit score

I’ve read 6 months of reserves will be needed for approval with Fannie/Freddie. Assume Fannie/Freddie is being used, this would put me at $40,080 in reserves needed to be approved.

Primary = $2200 x 6 months = $13200

Turnkey = $640 x 7 properties = $4480 x 6 months = $26880

Total = $40,080

Am I going thinking about this the correct way?

I’ve also read that you can use retirement accounts towards reserves, can anyone provide some feedback? Thanks in advance.

Within the next year I will be purchasing a home with my wife. We have a small amount of money saved towards the necessary down payment ($30k). I plan on utilizing equity within a rental home to get the remaining down payment needed. My credit score is around 800 at this point and a big advantage for us.

1. The moment I refinance my rental property (which can be challenging to begin with ... contacting Pen Fed), my credit score will be impacted. Should I wait to refinance my rental property until after we're pre-approved with a fixed rate mortgage? I assume this would give us the best rate possible and my credit score wouldn't be impacted until after I was pre-qualified. I'm prepared to tell the lender that we can put down $60k for the home ($30k from savings and $30k when rental is refinanced). 

Does this make sense? Looking for some feedback about the best way to proceed or if it matters at all. After the pre-qualification stage, will the lender run my credit report a second time to make certain things haven't changed?

2. Should I ask the lender if they would be interested in helping me refinance my rental property to get the remaining $30k needed? Would this help me obtain a better rate? This would put them in 1st lien position on two homes. 

Hello BP, I feel as though this might be a stupid question but I'm trying to get a better understanding of the true costs associated with hard money loans for educational purposes. 

1. Do HML typically require a down payment in addition to the points being charged to get the loan in the first place?

2. If my up front costs are $50k to get a loan in the first place (down payment and points), is this amount in addition to the purchase/rehab costs or go towards the purchase/rehab costs? Example - Not including monthly interest payments and carry costs, would my total cost be $250k if the purchase/rehab costs were $250k or $300k if you have to put up $50k to get the loan in the first place? 

Another way to think of it is what happens to the down payment? Does the down payment go directly to the seller and come off the purchase price or does the HML keep the down payment themselves in order to give the loan in the first place?

I'm trying to learn how this works to study the profitability of various investments. I want to know exactly how much of the sales revenue goes back to pay the original purchase/rehab loan off, plus any down payment, plus any carry costs, plus any other costs ...

It doesn't make sense to me that a HML would be willing to give so much money on a deal when they are only getting the upfront points being charged and monthly interest payments. I would think the HML would keep the down payment as well in order to give you the loan in the first place.

Just read in a separate article the impact people are expecting in Stafford County (Fredericksburg) and Reston due to Amazon. Traffic flow would still be horrible during the morning and evening rush going from those areas to Crystal City. Wouldn't the PG County areas (Capital Heights, Temple Hills, Oxon Hill) bordering DC have a better traffic pattern in rush hour heading towards Crystal City? 

@Russell Brazil Very good points about the diversity within the DMV market and high prices for condos/condo fees compared to reasonable rent rates in Crystal City. A significant down payment would be necessary to get cash flow on properties in Crystal City due to the high prices and condo fees. I'm thinking long term however and purchasing a property with sizable down payment in/near Crystal City could generate cash flow and provide a fast growing line of credit for other investments.  I just thought this would be an interesting topic to see what other investors are thinking. 

With such a diverse local market/economy, do you think rising interest rates will slow down buyers and force them into renting or will buyers see the benefits of owning in the DMV beltway area for long term? I'm concerned about interest rates and the impact when/if they get above 6%. 

@Marielle Walter My pleasure to get the thread started. I've read about Amazon hiring for the new VA location starting in 2019. I'm not certain when any sort of construction will begin. Apparently VA Tech is also building/opening a graduate innovation campus as well.

I wanted to start a discussion where investors can share ideas and strategies as Amazon moves into our market. We can also discuss the potential growth in property values and impact on surrounding markets due to the announcement.

For example, I have equity within a DC property and I'm thinking about purchasing a 2nd investment property near the proposed Amazon location. Both properties still need to cash flow and the purpose would be to take advantage of growing property values. I've read expectations of 20 - 50% increase in value within a 7 year period due to Amazon alone. What ideas do other investors have? How concerned should we be about a decrease in the economy over the next 3 years and could Amazon prevent this from happening in our local market?

Hi Justin - Thanks for the fast response ... this is very helpful as I'm trying to do some research and educate myself before making any moves.